The Advantages of Nearshoring

Over the last two decades our ability to communicate and pass data around the world with ease has changed how we live and world dramatically. The consensus for a while has been that distance has ceased being a factor, and that modern communication and online collaboration platforms means workgroups can be located anywhere with adequate internet connectivity. The offshoring boom that followed has undoubtedly been a success in many instances, and the rise of globalization has been driven by this offshoring ability.

However, after the initial rush and perceived success of offshoring, the limitations for both business and customers have started to become all too apparent. Language issues, different time zones and numerous other obstacles have become both operational issues and significant problems for customers where such offshoring is customer facing. The benefits to business of lowering costs and increasing efficiency however, have been borne out and as such simply abandoning the offshoring concept would be a poor choice.

In more recent times a different approach has been gaining in popularity, taking many of the benefits of offshoring and eliminating many of the drawbacks. Nearshoring, as it has been termed, seeks to place strategic processes in countries closer to home, taking advantage of lower costs but retaining time zone, geographic, social political or language similarities to retain a cohesive operation.

Nearshoring often involves locations in countries that share borders with the host country, as this often provides the best possibility for cultural, time and work practice similarity possible. One industry that has pioneered this shift to nearshore operation is the IT industry, where the use of a nearshore development company has become a very common situation in organizations both large and small.

The concept of offshoring was quickly adapted by the software industry in particular due to the ability to cut costs while retaining communication across the internet, the digital nature of the work itself mean that the other side of the world is as easy to send work to as the next office, but over time the limitations did become a hindrance. In fast paced software development, the time zone difference that offshoring often produces can become a real problem, narrowing the communication time-window between client and developer or just intra-development, causing delays or other issues for the project itself. Errors in development due to lack of communication can become significant factors in the likely success of a development project under these conditions, and this is why the industry has moved towards the nearshore development template with increasing frequency.

By combining the cost effectiveness of the offshore development ideal with the geographic convenience of countries sharing the same time zone, and often language and culture as well, nearshoring offers an effective compromise that appeals to an increasing number of organizations. An experienced nearshore development company will be able to leverage both cost savings and location practicality to offer tangible production and cost benefits for any project development.

Sharing office hours allows teams and communication to be much more effective, essential when creating the kind of agile and responsive development processes that today’s competitive market demands, allowing developers, clients and all stakeholders to communicate in real time during normal office hours when needed. There are other benefits too, cultural similarities, while they vary country to country, are often shared within a region creating a common basis for business operation that can assist in a smooth development process.

Additionally, there are legal advantages, in today’s world of trading blocs and shared regional business operation, the legal framework for various business operations and industry standards are shared within local areas and across neighbouring country borders. These kinds of shared standards can have a significant impact on the fluidity of software development in particular, and removes one major area of issue that can sometimes unnecessarily complicate the process when offshoring is utilized.

While offshoring is still by far the most dominant form of outsourcing, the ability to obtain the majority of the benefits while reducing the impact of the drawbacks significantly, if not eliminating them completely, means that the utilization of a Nearshore Development Company for projects is beginning to grown in popularity.

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